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tv   Closing Bell  CNBC  May 24, 2022 3:00pm-4:00pm EDT

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>> much better performance than the housing stocks. >> and consumer staples are coming nicely forward there, some of the ones we talk about kellogg, we just heard about general mills, campbell soup, her hershey. there's general mills up 1%. this was fun. >> watch out, tony romo. >> thanks for watching "power lunch. bye. stocks cutting their losses through the session, though the nasdaq is still under heavy pressure after snap sent shock waves across the market. the most important hour of trading starts right now welcome to "closing bell." i'm mike santoli sara eisen is on assignment in davos. we came back from the lows, down 2.5% the dow had been down 500 points it's ground its way back four of the last nine sessions the s&p has stayed below the 3900 level
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it's never closed down 20% so far that remains intact check out the biggest decliners right now in the nasdaq 100. still kind of the epicenter of the selling. you see dexcom down, datadog, pinduoduo and splunk all down. we have a great lineup, including nancy tengler, chris harvey, stephanie link and row hit. evan spiegel says snap will miss its own target saying the macro environment has deteriorated further and faster than anticipated joining us via phone is michael nathanson. michael, appreciate you calling in great to kind of get your take on this. so snap says it's the macro
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environment. you know, to some degree echos what we have heard from some consumer companies that things did slow down sharply in the last month or six weeks. can we take that on face value this is really what's happening in the digital ad market as regards snap >> yeah, i think it is i think it's a combination of e-commerce slowing down. you know, retail slowing down. the consumer it's all wrapped together and really killing snap in terms of what they're seeing. >> is there anything about snap, its particular franchise, its place within the ecosystem, its exposure to the tiktok audience, if there's overlap there, that maybe means it's a little worse for snap in terms of advertisers deciding to tighten budgets and leaving them on the outside? >> yeah, those are great questions. so let's frame it. the biggest risk you have is brand advertising.
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brand advertising is hard to prove, right so when things slow down, brand gets cut snap has exposure to brand the safest place is search they got no search what they focused on is that young audience, right? i'm learning those without clicking to buy something, they're really at risk, right? so your point, it's not a bellwether by any means, it's a great -- it's a great reflection on a mini audience i think it's snap's problem because of its niche that question makes a ton of sense to me. >> meta is down 9%, still above its lows clearly it's a much bigger earnings base there. when it comes to snap financially, clearly it's generally been losing money.
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there's a lot of stock-based compensation issuance. it seems like it really needed very rapid top line growth to make the model fully work and justify the valuation. where do you sit with that right now? >> yeah, so that's -- i agree with that too. we've been very skeptical about roku and twitter because those companies really don't earn anything they're not strong cash flow we thought snap could outrun its cost base and its stock base comp we really believed that the company could compoaompound groa a very high rate in the next few years. so we've been on the bullish side of that trade obviously terribly wrong and to your point, the risk you have now if it's slowing down to these levels, there's no valuation support. there's no cash flow, there's no earnings power it's really a growth story that is a prove it to me story. to your point, it can keep
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falling. there's no earnings support here there just isn't. >> yeah. is there anything that -- would you expect snap to be doing strategically to get around this or is it just about maybe cutting back on costs and waiting for things to firm up? >> yeah. you heard -- i think you saw in the memo that evan spiegel outlined slowing down spending, looking to be more thoughtful on it, you have to do that, right so the problem that you have is to your point the cost structure is based on forward growth that's not achievable right now. there's not much they can do they can't cut their way to profitability. so to me it really lengthens the timeline to be rewarded by owning snap. you have to wait now through whatever cycle we're going to see to get to the other side the selling is probably overdone, but i get the mood of the market
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i understand what's going on and now you have to prove there's growth here and wait two, three, four quarters from here to see what happens >> yeah. and just quickly, you covered the traditional media companies as well. anything to cause you to rethink the general ad trends there? >> we've been channel checking and hearing about -- we had a conference last week and all the companies presented, said april. but what we were worried about is a slowdown in june. so no one wanted to go ahead to june so hour challenge checks are suggesting that the quarter may end a little bit softly. so this data point -- and it's more about brand so i think there's just realistic concern about what it means for tv and broader media i think we'll find out more by the end of june whether this will hit other companies as well. >> yep have to monitor that michael, again, thanks very much michael nathanson.
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after the break, we'll talk about the renewed pressure in the market and whether or not you should buy the dips when we're joined by nancy tengler and sandy pomeroy. you're watching "closing bell" on cnbc. you're a one-man stitchwork master. but your staffing plan needs to go up a size. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire
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a huge player in the diabetes treatment industry they're up 6% with dexcom giving up almost 12%. take a look at the s&p sector heat map. tech, consumer discretionary and services getting hit the hardest. utilities and staples are holding gains as the s&p only down a little more than 1% at the moment joining us now is nancy tengler and sandy pomeroy. thanks to you both for being here nancy, obviously the inflation panic has morphed to some degree into a full-on growth scare. consumer cyclicals getting hit pretty hard. people concerned about exactly what we might be looking at in terms of potential recession does that seem well grounded to you and explain how the market is acting? >> yes, i think it does explain it, mike, and thank you for having me. you and i have had this conversation for the last year that we were going to slow in 2022 that is just the math, we knew
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this i think what you're seeing now is this extrapolation of recent data out to infinity we have a negative gdp print which was driven largely by a dramatic increase in imports as we unclog the ports. that had a negative effect on gdp of 3.2%. if that were backed out you would have seen a 1.8% rise in gdp. but you saw a strong consumer and consumer saving to the tune of $1.2 trillion that was against $1.39 in the fourth quarter when transfer payments were still in place so the historical data is not as bad as is being stated i hear people say with immunity, you had negative gp in the first quarter but there was a lot of good going on underneath, including an earnings season with real companies that was pretty darn good, as witnessed by them raising their dividends. so i'm happy to use this as an opportunity to step in and buy
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the higher quality names for the next three to five years. >> sandy, you focus on dividend stocks, equity income fund mainly they have held up rather well. in fact better than other companies that are more focused on buybacks. do you expect that this type of environment is going to continue what are you finding in terms of, i guess, what you have to pay for some of the favored names? >> yeah, so we've been running an equity income fund for 25 years. my team has run the same strategy for that long, so we have a lot of experience in this area these stocks were as cheap as they were back in the late 1990s, early 2000s, during the tech wreck that happened back then we were in the same position at the beginning of this year they were very, very cheap and so i think that because they were cheap to begin with and they have got growing dividends because free cash flow is
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growing and they are cheap, you have all those things combining together to set them up to be very good investments during this more inflationary period where the growth is a little less certain and you know you're going to get a good returning. a dividend return plus free cash flow growth. >> are there areas, sandy, you find stocks come into your zone in terms of dividend yield or anything else because of the market volatility? >> absolutely. so we've done a couple of things we run our screens every week looking for companies that have sold off where all of a sudden a high quality name like home depot, for example, which had traded down at its height below 2% dividend yield all of a sudden has a dividend yield closer to 2.5% that's very interesting to us. we also have taken advantage of the volatility and written puts against many high quality names where we not only get the premium from the put but we are able to, if we have the stock put to us, acquire the stock
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with a dividend yields that meets our criteria so we're able to target that 3% income return that's on our fund plus another 3 to 5% appreciation on top of that for a total return of 7 to 9% which is what we're targeting. >> nancy, you mentioned your willingness to buy some of the higher quality ideas for three to five years. what's come into that strike zone for you >> yeah, some of the same names that sandy mentioned we do -- we have been shifting our portfolios over the last quarter so we added to microsoft and taiwan semi, but we exited starbucks and moved those holdings or those assets into mcdonald's we added to philip morris, we added to a non-dividend payer, chipotle, and exited 3m and added to the defense names in the first quarter as well as steel dynamics and also added a position in public storage all of these are dividend growers and that's important,
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mike, because the dividend growth has been material we've seen companies come in like eog resources with three special dividends and a doubling of their existing dividend but then steel dynamics that raised the dividend 20% last quarter. those are the names we look for. i'm older i think than sandy i've been running equity income portfolios since 1984. they're not always the star of the show, but they are a great work horse when you're in an environment like this. >> yeah, i guess part of the argument for why dividend growth stocks can do well with inflation higher, guys thank you very much, nancy and sandy. appreciate it. let's check the markets now. the s&p 500 down less than 50 points at the moment 1.2% the dow not too far from the flat line, down one-fifth of 1%. the nasdaq down 2.8%, the russell 2000 also suffering, down 2%. abercrombie and fitch is the latest retailer to fall out of
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bed on the back of earnings losing a third of its value today. we'll talk to retail industry expert jerry storch who said a revolution is required to turn around some of america's best-known companies. check out some of today's top search tickers snap, no surprise, getting the most interest followed by the 10-year treasury yield, which is lower. the nasdaqme a tla 'lbeight back. schwab er kit we're rewriting the book on investing 101. new investors can open an account and get $101 to split across the top five stocks in the s&p 500®. you can also unlock short videos, step-by-step guides, and other easy-to-use tools designed for people just getting started. plus, investment professionals are on standby 24/7 if you ever have a question. it's investing 101, reimagined.
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shares are abercrombie tumbling after cutting its sales out look for the year. freight and product costs weighed on sales the stock is on pace for its worst day ever going back to its ipo in 1996. other retail stocks like american eagle and urban outfitters falling in sympathy joining us now is jerry storch, former toys "r" us ceo great to have you to sort through a tangle of issues affecting these retailers.
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on the one hand a little bit of consumer fatigue, but overlaying all that, the big box stores ending up with too much inventory. maybe they were too good at getting shipments when we thought it was going to be particularly tough and then i guess maybe some strategic blunders along the way too. how do you assign responsibility for what we're seeing in retail among these issues >> look, i think people are conflating different issues as if it's all one thing. first of all, the consumer is clearly healthy. i can't give you a warranty on that for the rest of the year into next year, but for now the consumer is healthy and they're just spending it in different ways including these retailers. they don't know what you paid for things so they're still spending money in stores, still spending money out of stores. they have shifted away from spending things from their homes, spending all their time cocooning. consumers fundamentally healthy. anybody who says anything else is not paying attention, one
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two, there are real supply chain issues and inflation issues. different retailers have done better or worse at that but they aren't all the same. people talk like target and walmart as if the results were identical. they were hugely different i'd rather be walmart or target. target's issues were they bought the wrong products they're way over inventory their gross margin deteriorated by over 400 basis points in the quarter. walmart gross margin deteriorated by 38 basis points. both companies had supply chain issues but they're going to fix those. being over inventory is a disaster walmart is not there t.j. maxx didn't have a problem with any of this finally there are other companies whose strategies just stink. they have been wrong for decades. they were wrong before the pandemic they're wrong now. they'll be wrong forever look at the department stores, macy's, even nordstrom's what a great name, a nordstrom, a kohl's
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take a look at bed, bath and beyond these companies hit their peaks a decade ago many of them, their stocks are at the same levels they were at in the 1990s they have been dead money the whole time don't they see that what they're doing is not working >> well, when it comes to a macy's, did they not make some progress on omni channel during the pandemic wasn't there a sense that we used the stores themselves as distribution centers and it seemed to get some traction. and then kohl's, very cheap stock, nobody is saying that they're killing it, but somebody wants to buy the company here. >> they have done some good things they're smart people they have worked hard. but it's three yards and a cloud of dust when they need to be throwing some hail mary's here their customer is generations away from today's customer it's grandmothers and it's old people that are shopping here, i'm sorry. these companies do not have today's millenial who are going i want to go to macy's oh, my gosh, i want to go to
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kohl's that's just not happening anymore, i'm sorry they need to think about who they're going to be in the future instead they're thinking about who they used to be and can they make it a little better, add a little internet sauce and change who they are but it's tinkering and that won't change one thing they're only going to go backwards. >> well, in terms of companies that are targeting younger people who don't remember the '90s, abercrombie we just talked about. obviously whether they're doing it right or not, that is the demo there is it just a clothing issue right now that we have to just sort of go through this lull in demand for apparel >> mall-based specialty apparel has been dead for a long time and will continue to be dead abercrombie, their stock hit their all-time high in 2007. the kids that were shopping there now, they're parents now they're not kids anymore and they were at the same level the stock is at today in 1997. it's yesterday's news. i can't even believe we're talking about it it's not even worth a billion
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dollar market cap. it's dead money. mall-based specialty apparel is not where these people wanting to shop. they want to shop on the internet, online look at revolve. you want to see a cool site where they're shopping, that's where they're shopping now >> jerry, appreciate the sharp-edged thoughts today thanks a lot >> mypleasure. >> talk to you soon. up next, wells fargo securities head of equity strategy, chris harvey, reveals where he sees value in this volatile environment. don't miss a special report on the technology sector tonight at 6:00 p.m. when jon fortt hosts a cnbc special, "trading tech."
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facebook's products harm children, stoke division and weaken our democracy. teens blame instagram for increases in the rate of anxiety and depression. it's not great when your customers are voting with their feet and deciding to kind of walk away. facebook's parent company meta dropping more than 26% last week... that is more than $230 billion in market share value. when will there be accountability? how many more people need to be harmed before mark zuckerberg listens?
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markets in the red, although well off the lows of the session. the nasdaq taking the brunt of the pain today, down more than 2.5% still as the sell-off deepens there. where can investors find opportunity? joining me now, chris harvey chris, good to see you we've done a fair bit of work, i guess, that needed to be done on the downside, you would expect the average nasdaq stock down 50 s&p multiple from 22 to 16 and change is it enough >> i think so. so today -- mike, something about today, maybe it's just a
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feel, i'm not really sure. but today i'm actually encouraged for the first time in a long time. you're right, we're off the lows, but more importantly the market is beginning to discriminate in addition to that, you're beginning to see rates react rates are going down one of our mantras and one of our comments is when equities go down, usually stock prices and bond yields don't go down together forever, because it's a self-correcting mechanism, right? stocks go down, you start to create more value. bonds go down and you're discounting mechanism makes your terminal value higher and all of a sudden we find the bottom. that's what we're beginning to see. also you're getting encouraging news out of the jpmorgans of the world, some encouraging news from the fed officials today they talked about when we get to 2%, maybe we need to look around and think about what we're going to do going forward and we need to see if inflation expectations are coming down and they are beginning to come down so i'm actually encouraged for the first time in a while. we still tell people to buy stocks, not the stock market
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but i think this price action, even though we are down over a percent, is actually encouraging. >> would you hope to see some of the other, i guess, sort of dominos fall in this process of trying to kind of make the market outlook more realistic, such as earnings estimates being cut down you hear a lot of people saying they would want to see another climactic flush lower or something tactical that says we've gotten to further extremes. >> coming into this year we were at 4715. we were third or fourth lowest on the street after being the bull on the street last year and we're expecting a 10% correction we got that and more the reason why we're somewhat negative coming into the year is we thought you needed multiple compression. you got that we thought interest rates and especially real rates needed to normalize. you got that we thought that the fed had to get motion, whether it's related to the balance sheet or it's related to raising rates that's been happening.
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and now with that 20 -- 15, 20% pullback, depending on what part of the market, you have uncovered value. the two last things we needed to see, we needed to see rates come down and we needed to see some softening of the fed rhetoric, which is what we seem to be getting in the short term. so i think there's a lot more value out there. it is actually encouraging because you're not also seeing indiscriminate selling like you were for a few days over the last couple weeks. and that's telling me that things are getting better. and your last point about some sort of cathartic puke orsome sort of big washout day, one of the things we will point to is msci's rebalancing at the end of the month, end of the quarter. and if you have the opportunity or need to reposition, that's the time to reposition so i'm not quite sure you're going to see another big volume day because there's going to be a massive volume day on the 31st if you have to reposition your book that's the time it's going to occur. >> it's going to affect a lot of
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different types of portfolios, but what specifically do you think the opportunity is going to be that's created >> well, a couple of things. so we are seeing the momentum in the rebalance and it's a wholesale change you're beginning to see defensives and energy, andi think the real opportunity is with energy. i think there's a spot for energy a lot of portfolios, whether it's an inflation hedge, whether it's because they improved their balance sheets and they are more quality or because they're one of the few sectors where you're seeing margins expand, not contract >> gotcha. chris, we'll keep an eye on it thanks a lot for joining. >> thank you all right. here's where we stand in the markets right now. less than a half hour to the close. you see the s&p 500 down about 41, so down a little more than 1% nasdaq still getting hurt by the growth tech selling down 2.6%. dow is flirting with the flat line, just below it and the russell 2000 down 2%.
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monkeypox cases continue to rise around the world. up next, which companies make vaccines to fight this virus and how their stocks have been faring. check out the home builders. they are getting hit hard after % arhome sales fell in april by 26ye over year that's the slowest sales pace since 2020 we'll be right back. your doctor gives you a prescription. “let's get you on some antibiotics right away.” we could bring it right to your door. with 1 to 2 day delivery from your local cvs.
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there are already vaccines that exist for monkeypox, mainly because we had them for smallpox so a very different situation than we were in at the beginning of the covid pandemic. there's one vaccine cleared for smallpox and monkeypox made by a company called vivarian nordic there's another that's older and both of those stocks have had quite big runups over the last week as we've had news of more cases mounting we spoke with a ceo about the incoming inquiries they're getting from governments around the world about their vaccine. here's what he said. >> it's been crazy, to be honest we've been inundated with calls. we're trying to help them deal with the current situation we're ramping up production as we speak and hopefully we'll be able to provide doses. >> now, there are also a couple of drugs out there for smallpox
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and you can see that stock is up 30%. it's a very small market cap company and sold to emergent biotech solutions. that has run up but come back a bit. the main names that we know from covid are not sitting this out moderna tweeting this week that it is investigating potential monkeypox vaccines regeneron i reached out to and they say they are following the situation closely and evaluating whether there's a role for monoclonal antibodies too. so this is something the drug industry is watching very closely, mike. >> it's good to hear there are options out there, meg thank you very much. as the dow has turned positive actually, it's up over 100 points at the moment, but snap remains in freefall and on pace for its worst day ever after a profit warning up next, an analyst who just cut his price target on the stock but still thinks it's a buy. that story, plus a check on the chips and why cruise stocks
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we are now in the "closing bell" market zone. hightower chief investment strategist stephanie link is here to break down the crucial moments of the trading day, plus rohit and seema mody on the fall for travel stocks. stocks climbing into the close with the dow turning positive. the nasdaq, though, still under selling pressure, down more than 2% steph, we're obviously seeing a little bit of discernment here in terms of what investors are willing to buy the dip in. a little more downside follow-through for the nasdaq, other things find traction we still haven't had that down
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20% close. how do you read it in terms of today and how we're absorbing these new growth fears. >> it tells me how much technology and com services are still overowned because they're the ones getting hit the hardest and for good reason. snap was a big surprise for just about everybody. but look, i think that we're in just really challenging times. i've been saying we're going to be in a choppy environment all year long, right, because of so many unknowns. we've talked about them. fed, inflation, war, china, et cetera the reactions that we're getting, though, are so extreme. if any company misses, it's really just mind boggling. but there are a lot of moving parts, as i mentioned, a lot of unknowns there's chatter about recession which i think are very premature. what i'm looking at is the last two weeks, what did we learn from these companies what happened in april what happened in april was the consumer changed their behavior from goods to services we had two big box retailers, walmart and target, double and
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triple order back in december of the wrong stuff. so there's tons of inventory that's why it was such a big surprise because these are really well-run companies. but we also learned that inflation and higher interest rates are hurting not only the consumer but these companies too. they weren't prepared. all of this wrapped up, april also showed us that the economy is still on solid footing, mike. i heard you and nancy tengler talking about the gdp report i totally agree with that. services was up 4.3% we also had good retail sales numbers. they grew 8.2% industrial production rose 6.4%. capacity utilization was up. so to me the economy is still solid. is it slowing? yes, it absolutely is slowing. but that was the premise that we talked about back in january we knew 2022 was going to be a slower growth year i still think it's growth, though maybe it's 2%, but i still think it's growth. at the same time, i still think inflation will stay high as well so these are the challenges that
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the market is going through. >> yeah, these are expected trends, but obviously sometimes painful to build them into the market let's move on to snap here shares getting pummeled, down more than 40% today. the company warning it won't hit its revenue and earnings numbers for the current quarter. that's bringing down other ad-related names like meta, roku and pinterest. what can we take from the snap warning here about its own position in the ad ecosystem and whether in fact we've misjudged how levered this company was to the macro environment? >> hey i think what snap told us yesterday was there is slowdown but we don't know. their commentary was vague and unclear how broad the slowdown is they are seeing e-commerce we know is slowing down online gaming is slowing down. streaming is slowing down. mobile gaming is slowing down. all these things is where snap
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plays the most and whether that is applicable to everybody else in the industry, it remains to be seen. today's reaction feels that the market believes across the board everybody else is slowing down, so let's just shoot first and think later. i think that leaves us to more possibilities as we digest what is happening in may, what will happen in june probably there may be a realization as a slowing down there could be a tale of two cities here. there could be slowing down in certain pockets in internet land certain pockets may actually start to act better. >> you know, i think the big picture fear, perhaps, that kind of shadows this entire market is a version of what happened after 2000 and not just the valuations came down a lot but also that tech startups couldn't raise more capital or were tightening their belts. one company's spending is another company's revenue and
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there was a downward spiral in the fundamentals as the stocks kept going down. is there anything across your internet coverage that suggests we have this dynamic replaying >> obviously we will start seeing them. there is going to be a lag effect in there. startups tend to buy post advertising on google. those are the two 40 to 50% of the costs that startups seem to have outside of hiring engineers. so we'll probably start seeing that later, q4, maybe early q1 next year. that is probably going to happen but in the meanwhile as stephanie said, we are in this discovery more of what it is going to look like in this high inflation, high interest rate environment. we haven't seen that in the last 20 years to be honest, so that is what is going on right now. whether ten times price to sales is going to be a 30 times ebitda, so there are some ways to go for some companies, given
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they're burning cash, they still have negative operating margins, so there is still going to be more volatility even if the macro environment turns out not to be as feared. >> rohit, thanks very much snap now down about 85% from its highs. chip stocks are dragging on the overall tech sector as well, down more than 2% into the close. micron no exception, one of the worst performers in the group today. sara sat down with micron's ceo in davos today and he gave a bullish outlook for micron amid supply chain challenges. >> i think overall supply chain is getting better for semiconductor availability, but it is not out of the woods yet i expect it to continue to get better some of the shortages may still last into 2023, particularly on some of the foundry capacity as well as some of the analog legacy kind of nodes >> steph, micron down by a
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third. i mean probably in line with many other semi companies. it always looks cheap, it's super cyclical how would you play it here if at all. >> i think what he said about supply chain is very consistent with what other technology ceos were saying. intel said not until the end of '23, maybe '24 intel said a couple more years cisco said probably end of '23 the point is i don't think any of these ceos really know. i think it's impossible to know. but it's going to take a while and this leads us back to the inflation story, why it's going to remain elevated, because i don't think the fed raising rates, even to the neutral rate, whatever that number is, is going to be impactful to inflation. so we have to live with it i thought his comments about memory and storage and that being a secular grower was interesting because, again, they have exposure to ai, 5g, data center and that sort of thing.
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so if this were to come down a lot more, i might take a look at it because the total addressable market will be a $332 billion total addressable market in 2030, up from 260 today. >> all right meanwhile, don't miss more coverage from davos tomorrow including sara's interview with salesforce chairman marc benioff at 10:00 a.m. eastern time it has been a tough day and a month for retail stocks. the etf down more than 3% in today's session. the worst performer is abercrombie after reporting an unexpected loss for the first quarter. it is the latest retailer to get hit hard last week saw target and walmart sell off after weaker than expected results joining us now is brian nagel to talk about some of these trends. brian, good to speak with you. what's your main takeaway from, let's say, target, walmart, best buy had to say we knew there was going to be a shift away from goods purchases
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towards services obviously there's inventory issues how is that filtered into your outlook. >> good afternoon, thanks for having me on i think stephanie brought up the perfect point and that's what's happening here the economy is moving away from the covid-19 pandemic and consumer spending is shifting. we start talking to our clients about this a couple years ago. we were obviously very early with the call, but nonetheless it's happening and i think right now from an investor standpoint the market is very much on recession watch. any signalled weakness from any retailer or brand is being taken as an indication the consumer is slowing. but i oftentimes -- as i'm looking at this data, i think that at least initial interpretation is probably not correct. i think the underlying consumer here is in good shape, but you're definitely seeing shifts in consumer spending as the economy moves away from the pandemic >> we see best buy actually able
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to stay green today. it's up about 1% on the back of its results. you know, they were mixed, i suppose, but it was all about what was already priced into the stock, down by nearly half is that encouraging at all does it imply something about how these stocks have already accounted for some of these issues >> i think it does i think there's a lot now that's discounted in these stocks i think i looked at best buy and the note we put out to our clients, we basically said it was soft but very much better than feared. the big issue for best buy is they were here in q1 of '22, they were lapping an extraordinarily strong q1 of '21 which was fueled by -- you still have these trends, stay-at-home type trend was still in place but probably more important than that was stimulus-fueled spending so on top of that, best buy sales were weak, but they actually held up better than feared >> steph, i mean as you pick
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through these, target has gotten very little relief after its shocking drop on its news. you see abercrombie today. are you catching any of these falling knives, i guess is the question >> no, i'm not i mean i own target. i'm just going to let the dust settle on that one because i think it's going to take time for them to kind of fix this inventory. 75 days of inventory but who benefits from that is tjx. and that stock is still down 20% on the year, trades about 18 times earnings they benefit from all those excess inventory and they had a very good quarter. they actually raised their margin forecast because they have a pricing initiative under way that actually is working this is a treasure hunt. it's also a little bit of a reopen people do want to go to the store. they also have housing exposure which i think will stay strong and kacomps will remain elevate >> brian, thanks for joining us. appreciate it. travel stocks are significantly underperforming the broader market and the cruise line
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stocks getting hit especially hard in all of that. seema mody joins us. seema, why are travel stocks underperforming so much today? we thought this was a problem with goods spending. >> clearly not travel getting caught up following disappointing guidance from best buy and other retailers. even though the marriott ceo said bookings are holdings up, it's the concern around what happens post summer. now, as you said, the cruise lines among the worst performers today. it's one of the reasons i'm told my sources that carnival is in preliminary talks to sell one of its cruise brands, sea born. one suitor is the saudi sovereign health fund and it comes after the cruise operator raised about a billion dollars in debt at a yield of 10%, which did raise some eyebrows. you'll see shares of carnival have dropped about 40% in the past three months. these stock prices can of course have an effect on the type of deals that come to market, mike. >> absolutely. as we've discussed several
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times, these companies have big balance sheet issues based on what they had to do to get through the pandemic steph, what about you? in terms of some of the hotels or any of the other plays in here >> yeah. i wouldn't touch the cruise lines or the airlines, by the way. they both have balance sheet issues but i do like something like expedia or bookings holdings where they are sold out. and they have been for quite a while. but i like expedia because they have a margin recovery story as they cut costs and restructure the company. then they eventually generate free cash flow i think marriott has held in remarkably well in this downturn hilton is an interesting opportunity. i sold that higher a couple of months ago but it's now down about 18% on the year. they're doing all the right things and seeing fee growth and they have pricing power. so those are the areas that i would focus on, less on the ships and the airlines >> our thanks to seema now, teph, as we get toward th close here, the bank stocks have
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held up okay they were up 4% yesterday. they seem like maybe they have some traction. what other thoughts would you pull out of today's action >> yeah, i mean it is encouraging. the banks have been the second worst sector year to date so it was encouraging that people listened to what jamie dimon had to say, that the economy was quite strong brian moynihan talked strength about the consumer, so did the ceo of citigroup so that's a place that you could see catch-up trade they're so tied to rates jpmorgan raised their net income numbers yesterday. wells fargo has the most exposure, bank of america the second so i still like the banks. that's where i'm a little bit overweight i still like health care as a more defensive area and i remain underweight in technology. let the dust settle. it's going to take a while for those to recover, i think. >> anything to read from the reaction of meta to the snap news here? it's trying to hold above its lows obviously people have been saying for months that it looks
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inexpensive. >> including me. >> sure. >> i own it, i have been adding to it. i kind of think 14 times earnings, not price to sales, it's actually very, very cheap they have size and scale they have 2 to 3 million daily active users, monthly active users. they grew those numbers sequentially last quarter, generating a lot of free cash flow $48 billion in cash, by the way. i feel like if they can get reels right, and they have to get reels right, but it does sound like they're making some progress and that's going to be the second half of this year so i'm staying patient with it. i do think for the long term this will be a winner. >> all right, steph, thank you very much. as we head toward the close, less than two minutes to go right here closing in on the highs of the day here the advancing versus declining volume still skewed pretty far to the negative side as often happens when you have an early sell-off you've got basically 2-1 declining volume to advancing volume we did have treasuries rising today, yields coming in.
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look at a month-to-date basis, the aggregate bond index has outperformed stocks by 5 percentage points. a lot of talk that this might create a little rotation towards equities out of fixed income jpmorgan trying to make that case and the volatility index remains in this frustrating zone right around 30, not showing fresh alarm, but also not collapsing so we're kind of stuck right here around these indecisive levels, i would argue. as we get into the close, the dow jones industrial average remains higher just slightly some of the more defensive dow stocks have been leading the way there, including mcdonald's and united health, amgen and procter & gamble the s&p 500 i mentioned has spent parts of four of the last nine days underneath the 3900 level. we have not yet closed under there. not yet closed at a down 20% number yet so that shows you perhaps there's a little traction being attempted there sor some buying interest down in
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that level but the nasdaq composite really has not had very much relief it's down 2.4% on the day. it's on pace to close down more than 30% from its all-time high and that would be a fresh low. not too many 30% declines in history out there. that's it for "closing bell. i'm going to sending it over to scott for "overtime. all right, mike, i'll see you in just a little bit welcome to "overtime, " everybody. we're just getting started we're waiting on nordstrom earnings we'll bring you those numbers and the color as soon as all of that happens critical earnings report given what's going on right now in retail i'll also speak to star venture capitalist rick heitzmann on what snap's shocker means for the rest of the social space we do begin, though, with our talk of the tape the tug of war currently under way in this stock market it was on full display especially i

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